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Get to Know the French Rent Reference Index

Volume XXIII, Issue 4

People on their balconies on an apartment building in Paris

By Jay Corless, edited by Adrian Leeds

Navigating the complexities of renting or investing in France requires a solid grasp of the rules that govern rental adjustments. In 2025, the Rent Reference Index (Indice de Référence des Loyers, IRL) is projected to increase rents by an average of 1.82% annually, providing a modest but predictable adjustment tied to inflation trends.

It’s this kind of predictability and transparency that makes the French rental market both a challenge and an opportunity—but let’s be honest, navigating it can feel like deciphering a French menu when you don’t speak the language. C’est la vie, right? Luckily, once you understand the basics, the Rent Reference Index is essential in the French real estate landscape. Understanding how this index works is crucial for landlords and tenants alike to ensure fair and lawful rent adjustments.

Calculators and notepads for figuring out rental adjustments

THE RENT REFERENCE INDEX (IRL)

Ah, the IRL. It’s the unsung hero of France’s rental system, the regulation that quietly keeps the peace between landlords and tenants. Established in 2008, this little index is all about balance: ensuring landlords can adjust rents in line with inflation while protecting tenants from sudden, arbitrary increases. Think of it as a built-in referee for the rental market, ensuring fair play on both sides.

The IRL is part of France’s commitment to protecting landlords and tenants, and is a benchmark used to regulate rent increases. Published quarterly by the National Institute of Statistics and Economic Studies (INSEE), it reflects changes in consumer prices (excluding tobacco and rent) over the previous 12 months. The IRL prevents arbitrary or excessive rent hikes by ensuring that rental adjustments remain tied to inflation rather than market volatility or landlord discretion.

The IRL applies primarily to leases for unfurnished properties governed by the 1989 Law on Residential Leases and to furnished rentals under Article L. 632-1 of the Construction and Housing Code (CCH). Its relevance spans from Paris’s Haussmannian apartments to countryside cottages in Provence, ensuring a uniform standard across France.

Map of France showing the median for rents across the country

THIS IS HOW IT WORKS

INSEE releases the updated IRL each quarter, which is calculated as an average consumer price index over the past year. This figure, placed within a rent revision clause in the lease, determines the lease’s maximum allowable rent increase. Without this clause, landlords cannot adjust the rent, regardless of changes in the IRL.

For instance, imagine a landlord signed a lease in July 2023 with a monthly rent of €1,200. The IRL for the second quarter of 2023 was 133.93%, and for the second quarter of 2024, it increased to 145.17%. Using the formula below, the landlord can calculate the adjusted rent:

Adjusted Rent = Current Rent x (Latest IRL/Previous IRL)
Plugging in the values: €1,200 x (145.17/133.93) = €1,300.12

This means the landlord can raise the monthly rent to approximately €1,300. However, the increase applies only from the lease’s specified revision date or anniversary.

Chart of the Rental Reference Index from 2021-2024

KEY CONSIDERATIONS FOR LANDLORDS AND TENANTS

Keep in mind that rent increases are not automatic. Landlords must inform tenants of any rent adjustments. While the IRL sets the ceiling for increases, the adjustment requires action. If the landlord misses the one-year window to revise the rent, they forfeit the opportunity for that year—and cannot make it retroactive.

Also, note that regional and legal variations exist. In regions like Paris and Lille, where rent control laws apply, landlords must adhere to additional limits set by local authorities. These caps are designed to prevent unaffordable rent hikes in high-demand areas and offer further protection to tenants.

Another item to consider is that the Rent Shield (Bouclier Loyer) is in limbo. Between 2022 and 2024, the French government introduced a temporary cap on IRL increases to mitigate the effects of inflation. For mainland France, annual increases were limited to 3.5%, while Corsica’s cap was set at 2% and overseas territories at 2.5%.

THE IRL MATTERS FOR PROPERTY INVESTORS

The IRL provides a predictable framework for managing rental income for property owners and investors. While it may limit the potential for aggressive rent increases, it stabilizes the rental market, preserving long-term relationships with tenants. The IRL ensures that investment properties remain attractive while fostering tenant satisfaction and legal compliance.
Incorporating the IRL into financial planning is essential from an investor’s perspective. Prospective buyers must consider how the IRL might influence rent adjustments when calculating rental yields or future income. Understanding local rent control measures alongside the IRL is essential for those purchasing property in areas like Paris, Nice, or Lyon.

COMPARING RENT REGULATION: FRANCE VS. THE USA

While France’s IRL offers a uniform, inflation-tied method for adjusting rents, the United States’ approach to renting regulation is far more fragmented. Rent control policies in the U.S. vary widely by state and city, with some jurisdictions having stringent caps on rent increases while others allow landlords complete discretion.

First, rent control laws limit how much landlords can increase rent annually in cities like New York, Los Angeles, and San Francisco. These policies often cap increases at a fixed percentage, such as 2-3%, or tie them to local inflation rates. However, unlike France’s IRL, these regulations are localized and not standardized. Many U.S. states, such as Texas or Florida, have no rent control laws at all, allowing landlords to set rent increases based on market conditions.

Graph showing the Rental Reference Index

Second, unlike France, where the IRL is a nationally governed index, the U.S. lacks a federal standard for rent adjustments. This means that tenants’ and landlords’ rights vary significantly depending on the location, making it challenging to navigate rental markets across state lines.

Also, France’s IRL consistently protects tenants against excessive rent increases, fostering long-term stability. In contrast, U.S. tenants often rely on local advocacy and laws for similar protections, and in many states, these safeguards are minimal.

Finally, the U.S. market’s lack of uniformity can be both an opportunity and a risk for investors. High-demand areas with rent control may limit rental income growth, while markets without such restrictions can yield higher returns but may also experience volatility. France’s IRL, by contrast, offers predictability, which can appeal to risk-averse investors.

PARTING REFERENCE

The Rent Reference Index is a cornerstone of France’s rental market, ensuring that rent adjustments remain fair, transparent, and tied to economic realities. Whether you’re a landlord seeking to protect your investment, a tenant ensuring your rights are upheld, or an investor evaluating opportunities in the French property market, the IRL is a vital element to understand. As with any aspect of French real estate, staying informed and seeking professional advice—especially from experts familiar with local markets, such as ourselves—is the key to navigating this system effectively.

A bientôt,

Adrian Leeds in ParisAdrian Leeds
The Adrian Leeds Group®

P.S. Thanks to all you who have written in with your concerns of my health. It has been enormously heartwarming and appreciated. The good news is that I’m on the mend and perhaps by the time you read this, I’ll be home and taking it as easy as I can! Be safe, stay vigilant and well.

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